Although colony growth and morphology are central tools in yeast genetics, little is known about the cell physiology and how it changes during the colony growth and ageing. Here we show that the growth of a well-separated Saccharomyces cerevisiae colony is biphasic; a rapid growth phase is followed by a sharp transition to a slower growth phase. In the first growth phase ( approximately 24 cell divisions) most, if not all, cells divide at a rate similar to that in liquid medium and exhibit morphological, biochemical and genetic characteristics of cells engaged in the cell cycle. During the second growth phase, cells in the centre of a colony gradually enter stationary phase, so that later in this phase the growth occurs predominantly at the periphery. Unlike the biphasic growth in rich liquid media containing a fermentable carbon source, in which the first growth is fueled by fermentation and the second by aerobic metabolism, the two phases of the colony growth can be fueled either exclusively by fermentation or exclusively by aerobic metabolism. We also describe a novel technique for in situ estimation of the transcriptional status in the colony cells, which was used to monitor transcription dynamics during the colony development. Using this technique and standard methods to determine mRNA levels, we show that the transition between the first and second growth phases is accompanied by a global change in the pattern of transcription: transcription of most genes is repressed while that of some genes is induced.